, NAIROBI, Kenya, Apr 7 – Chase Bank has been placed under receivership for 12 months, a decision the Central Bank of Kenya (CBK) says is meant to protect depositors, creditors and the general public.
A statement from the Central Bank says the Kenya Deposit Insurance Corporation (KDIC) has been appointed as a receiver for the bank that reported a Sh792 million loss in the latest financial results – coupled with revelations of unsound transactions.
“The appointment of KDIC as a receiver for Chase Bank Limited has been carried out in the interest of its depositors, creditors and members of the public,” a statement from CBK explained.
“Section 43(2) of the Kenya Deposit Insurance Act, 2012 requires CBK to appoint the KDIC as a receiver of a bank, if, among others, an unsafe or unsound condition to transact exists; a bank is likely to fail to meet its financial obligations a bank has substantially insufficient capital or if there is a violation of any law or regulation,” it further stated.
Curiously, the CBK had assured the public Wednesday that there was nothing to worry about following reports that the bank was facing serious financial problems.
The decision to place the bank under receivership comes a day after the appointment of Muthoni Kuria as the new board chairperson following resignations of long-serving Chairman Zafrullah Khan and Group Managing Director Duncan Kabui.
According to CBK, Chase Bank was not able to meet its financial obligations on April 6, 2016.
“One of CBK’s primary role as a regulator is to foster the liquidity, solvency and proper functioning of a stable market-based financial system. Chase Bank Limited experienced liquidity difficulties, following inaccurate social media reports and the stepping aside of two of its directors,” it said.
Chase Bank stated that Khan and Kabui stepped aside following the publication of the 2015 financial statements which reveal a significant jump of its non-performing loans from Sh3 billion to Sh11 billion.
Interestingly, the bank released a revised 2015 statement showing a significant difference in the loans advanced to directors and employees.
A number of banks have faced closer scrutiny from the regulator resulting to the closure of Imperial Bank and the exit of the NBK Chief Executive Officer along with five senior managers.